How much do you need to retire?

Highlights

• A recent study conducted by Purpose and Angus Reid found that about 50 per cent of Canadians above the age of 55 are not sure if they will have sufficient savings for their retirement years.
• Generally, people tend to be either worried about not saving enough for retirement, or seem to not know how to begin planning for it in the first place.
• Retirement planning is the process of identifying your income and savings goals for later years when you are no longer actively earning from a job, and acting on it accordingly.

Financial planning is a necessary aspect of life. When not ideated well, it can cause significant problems in the long run. Apart from planning out near-term financial goals, it is also important to have a substantial retirement plan in place. 

A recent study conducted by Purpose and Angus Reid found that about 50 per cent of Canadians above the age of 55 are not sure if they will have sufficient savings for their retirement years. It also noted that one person among five in this age group claimed to have taken out money from their retirement fund, postponed retiring or stopped putting money aside for retirement altogether.

Generally, people tend to be either worried about not saving enough for retirement, or seem to not know how to begin planning for it in the first place.

If you are facing problems figuring out your retirement plans, worry not. We are here to help you. 

What is retirement planning?

Retirement planning is the process of identifying your income and savings goals for later years when you are no longer actively earning from a job, and acting on it accordingly. It includes several factors, such as determining a source of income, proper planning, starting savings programs, etc.

A retirement portfolio should ideally be developed keeping in mind a smooth and significant cashflow for the future to maintain a good lifestyle. Hence, its planning needs to be based on an individual’s lifestyle and cannot be the same for all. 

One can also not presume how much amount they are going to need for their retirement pensions, which is why the size of a retirement portfolio also often differs from one person to another.

Also Read: Planning retirement? Seven tips to ensure your golden days are really golden

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How can you plan your retirement in Canada?

A number of factors can affect your retirement plans, such as starting a new business, getting a high-income job, medical bills, asset-based profits or losses, etc.

According to some experts, people in their 20s should ideally keep aside five per cent of their salary for retirement. In their 30s, this portion can go up to 10 per cent, and so on. 

The amount, however, can vary based on different factors, such as pensions,  medical requirements, travel plans, etc.  

At the end of the day, retirement planning becomes a lot easier when you have a considerable understanding of personal finance. 

Also Read: Tips for Early Retirement For Canadians 

At what age will you retire?

A person is generally expected to retire from active work life around the age of 60 to 65, which is why most retirement plans are developed according to that.

However, if someone plans to retire before that age, their retirement plans will have to be groomed as per that requirement.

Basically, you need to shape your budget plans in accordance with when you desire to stop working. 

Also Read:  Steps to build portfolio for early retirement

Income from government

Canadians can access retirement support from the government based on their eligibility.

After qualifying certain criteria, Canadians can access support programs such as Canada Pension Plan (CPP) and Old Age Security (OAS) plans.

Also Read: What is a Retirement Income Certified Professional (RICP)? 

Many Canadians also access the Old Age Security and the Guaranteed Income Supplement program for their retirement years.

There are also a few methods to keep in mind when planning for retirement

Bottom line

Any person entering adulthood may not have enough money for retirement right away, but they can have enough time to save up for the future. So, plan your financial saving goals for work life, and you can be set for your retirement.